Orthofix Territory Manager Convicted For Committing Health Care Fraud And Paying Kickbacks

BOSTON – A former Orthofix territory manager was convicted today for health care fraud and paying kickbacks.

Hunter A. Rigsby, 33, of Knoxville, Tenn., pleaded guilty before U.S. District Judge F. Dennis Saylor IV to health care fraud and paying kickbacks.

Rigsby was a territory manager for Orthofix, Inc., a company that sold bone growth stimulator medical devices. Bone growth stimulators are used by patients who have broken bones or spinal fusions that are not healing properly. From 2005 through 2011, Rigsby sold Orthofix bone growth stimulators in Tennessee. Medicare only pays for “long bone” stimulators when at least 90 days have elapsed without clinically significant healing, and it only covers certain types of injuries. Rigsby was well-aware of these guidelines, having received training on these guidelines at Orthofix. On numerous occasions, doctors in Rigsby’s territory ordered bone growth stimulators that did not satisfy Medicare’s guidelines. For instance, some doctors prescribed the device before 90 days had not yet elapsed without any healing, and other doctors prescribed the device for patients who had injuries that were not covered under Medicare’s guidelines. When this occurred, Rigsby often forged the patient’s medical records to make it appear as though the claim was payable under Medicare’s guidelines, when in fact Medicare should not have paid the claim. For instance, Rigsby falsified doctors’ chart notes to make it appear as though Medicare’s 90-day rule was satisfied. Rigsby also deleted portions of physicians’ chart note that described patients’ injuries which were not covered by Medicare and changed the note to make it appear as though the patients had injuries that were covered. On some occasions, Rigsby submitted orders where the physician had not ordered a bone growth stimulator at all. Rigsby also forged physicians’ signatures on prescriptions and Medicare Certificates of Medical Necessity.

In July 2009, Orthofix fired Rigsby after discovering his fraud scheme. Immediately thereafter, Rigsby and Orthofix sales personnel devised a scheme to allow Rigsby to continue to submit bone growth stimulator orders to Orthofix through a new front company that Rigsby created. Rigsby took numerous steps to conceal his affiliation with the front company so that Orthofix compliance personnel would not detect that he was still doing business with the company. Rigsby continued to submit orders for stimulators, sending the orders in through separate individuals. Even though Rigsby had been fired for falsifying medical records, he continued to manipulate patient medical records and forge physicians’ signatures until Orthofix finally severed its relationship with him in 2011. Through his scheme, Rigsby caused Medicare and other federal insurance programs to pay more than $400,000 for bone growth stimulators that should not have been paid.

Rigsby also paid kickbacks to health care professionals to induce them to order Orthofix stimulators. For instance, Rigsby paid the person who was responsible for ordering stimulators at one of the largest medical practices in Tennessee. Rigsby approached this person and asked if he could pay this person in return for steering stimulator orders to Orthofix. The person agreed, and Rigsby left an envelope with $200 in cash at the person’s house. In another instance, Rigsby entered into an arrangement to pay a nurse in Morristown, Tenn., each time that the surgeon who employed her ordered an Orthofix stimulator. Rigsby left an envelope of cash, between $200-$300, in the back of the nurse’s truck after the surgeon began to order stimulators.

In addition to the Rigsby sentence, the Orthofix investigation has to date resulted in a number of felony charges against employees and contractors of Orthofix, including the following:

• In December 2012, Orthofix was convicted of obstruction of a federal audit and ordered to pay $42 million in criminal fines and civil payments, and was sentenced to probation for five years;
• In January 2013, Tom Guerrieri, the former vice president of sales for Orthofix, was sentenced to eight months in prison and ordered to pay $50,000 in fines and forfeiture for paying kickbacks;
• In July 2012, Michael Cobb, a physician’s assistant, was sentenced to six months in prison and six months home confinement, and ordered to forfeit $10,000 and pay a $3,000 fine for accepting kickbacks from Orthofix;
• In January 2013, Derrick Field, a former Orthofix territory manager, was sentenced to five months of home confinement as part of a two year probation sentence, forfeiture of $40,000 and a $4,000 fine for committing health care fraud;
• In January 2013, Mitchell Salzman, a former regional manager for Orthofix, was sentenced to one year of probation, with the first three months to be served in home confinement, and ordered to pay a $2,000 fine for committing perjury;
• In January 2013, Michael McKay was sentenced to one year of probation, with the first three months to be served in home confinement, forfeiture of $10,000 and a fine of $3,000 for committing health care fraud; and
• In February 2013, Brian Racey, a former Orthofix territory manager, was sentenced to one year of probation and ordered to pay a fine for committing health care fraud;

Judge Saylor scheduled sentencing for August 9, 2013. The statutory maximum penalty on the charge of health care fraud is 10 years in prison, followed by three years of supervised release, a fine of $250,000 or twice the loss or gain resulting from the crime, whichever is greater, forfeiture, restitution, and a mandatory special assessment. The statutory maximum penalty on the charge of paying kickbacks is five years in prison, followed by three years of supervised release, a fine of $250,000 or twice the loss or gain resulting from the crime, whichever is greater, forfeiture, restitution, and a mandatory special assessment.

United States Attorney Carmen M. Ortiz and Susan J. Waddell, Special Agent in Charge of the Department of Health and Human Services, Office of the Inspector General, Office of Investigations, made the announcement today. The case is being prosecuted by Assistant U.S. Attorney David S. Schumacher of Ortiz’s Health Care Fraud Unit.